Central and Eastern Europe: Negotiating Influence in an Enlarged European Union

Abstract

This article analyses the influence and status of the Central and Eastern European states within an enlarged European Union. It analyses two European Union policy negotiations: the Services Directive and the European Union's Financial Crisis Rescue Plan. Central to understanding the influence of a member state within negotiations are its economic size and knowledge of the Brussels policy-making apparatus. Nevertheless, as the new member states from Central and Eastern Europe have gained experience of the European Union policy negotiation process, they remain limited in their ability to influence outcomes. Therefore it can be concluded that while knowledge during negotiations is a necessary condition for successfully influencing outcome, alone it is insufficient because economic weight is particularly pertinent to those outcomes. As a result, the status of the new member states within the European Union is best described as being that of a junior partner, despite the assumed parity of Union membership.

Notes

I gratefully acknowledge the Hallsworth Research Fellowship Scheme at the University of Manchester which has made this paper possible. Special thanks to Eamonn Butler for his enthusiasm and invaluable support during the writing of this paper, as well as the Accessing Accession network. I would also like to thank Christine Agius, Andrew Clark, Beryl ter Haar, Mick Moran, Deborah Mabbett and Ralph Young, as well as two anonymous referees for their constructive comments on various drafts of this paper. The normal disclaimer applies.

¹ For CEE countries, EU membership has been highly sought after, not just because of the economic benefits of membership, but also because it would consolidate the progress made during the economic and political transition process. ‘Return to Europe’ slogans were a dominant feature of the referendum campaigns in CEE (Baun et al.2006; Fowler 2004; Hanley 2004; Mikkel & Pridham 2004); and the high approval ratings for a yes vote in the referendums were indicative of the broad level of support for EU membership.

² ‘The term “unanimity” means the requirement for all the Member States meeting within the Council to be in agreement before a proposal can be adopted. Since the Single European Act, the scope of the voting procedure for unanimity has become more and more restricted. The Lisbon Treaty again increases the number of areas where qualified majority voting in the Council will apply. However, a restricted number of policies judged to be sensitive shall remain subject to unanimity voting, specifically taxation, social security or social protection, the accession of new states to the European Union, foreign and common defence policy and operational police cooperation between the Member States’, European Union Glossary, available at: http://europa.eu/legislation_summaries/glossary/unanimity_en.htm, accessed 13 November 2013.

³ The analysis of the two case studies is based upon the primary working documents relating to the two negotiations. These include the various proposals released by the European Commission, the European Parliament and the European Council; the various minutes from meetings within these institutions; reports produced by the key representatives, the Permanent Representations of the member states in Brussels and the various interest groups. The analysis is supported by ten semi-structured interviews conducted in March/April 2007 and December 2010 with representatives from the European Commission, the European Parliament and the various Permanent Representations of the member states in Brussels.

⁴ However, it is worth noting that unlike the claims of the LI framework, member state positions are not made in isolation from each other or rationally. Stances adopted by governments in EU negotiations are influenced by policy initiatives launched by the Commission, affected by the anticipated reactions of other actors, and shaped by considerations of what objectives are negotiable in light of the position taken by other member states (Sandholtz 1996).

⁵ The Netherlands has, however, become the largest ‘contributor’ to the EU budget in terms of amounts per capita of the population.

⁶ ‘Uploading’, or national projection of policy preferences, can be seen as states ‘projecting their national policies and policy styles onto the larger European structure. … By exporting their preferences and models onto EU institutions, they in effect generalise previously national policies onto a larger European stage’ (Wong 2011, p. 161).

⁷ Previous studies have illustrated that initially new member states prefer to have large permanent representations within the EU (regardless of their size), in order to gain experience and maximise potential uploading (Kassim et al.2001).

⁸ EU-15 refers to the 15 pre-2004 EU member states. Vintrová (2004, p. 521) estimates that the 2004 Central and Eastern European member states have an average GDP per capita of just 46% of the level enjoyed by EU-15. The figure for Malta and Cyprus is likely to be similar and that of Romania and Bulgaria will be less.

⁹ ‘French Say Firm “No” to EU Treaty’, BBC News, 30 May 2005, available at: http://news.bbc.co.uk/1/hi/world/europe/4592243.stm, accessed 5 October 2009.

¹⁰ Interview 7, Administrator of the European Parliament, Brussels, 11 April 2007.

¹¹ The Lisbon Strategy, also known as the Lisbon Agenda or Lisbon Process, was an action and development plan devised in 2000, for the economy of the European Union between 2000 and 2010. Its aim was to make the EU ‘the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion’ by 2010 (European Council 2000).

¹² The country of origin principle stipulates that if an action or service is performed in one country, but received in another, the applicable law is the law where the action or service is performed. Therefore the utilisation of the country of origin principle would enable temporary cross border service providers to provide a service in another member state on the basis of the home country's regulations.

¹³ Posting of Workers Directive (1996), available at: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri = CELEX:31996L0071:en:HTML, accessed 5 November 2013.

¹⁴ See also European Trade Union Confederation, ‘Viking and Laval Cases: Explanatory Memorandum’ (2008), available at: http://www.etuc.org/IMG/pdf_ETUC_EXEC_Vik ing_Laval_-_expl_memorandum_7-3-081.pdf, accessed 21 September 2010; European Trade Union Confederation, ‘Laval Case: The Course of Events’ (2006), available at: http://www.etuc.org/IMG/pdf/Facts_memorandum_detailed1.pdf, accessed 21 September 2010.

¹⁵ Interview 1, Representative of the Swedish Permanent Representation in Brussels, Brussels, 7 March 2007.

¹⁶ Interview 3, Member of the European Parliament, Brussels, 19 March 2007.

¹⁷ There was little evidence to suggest that the new member states were communicating between themselves on the issue and when they acted, they tended to do so individually. Interview 8, Representative of the Polish Permanent Representation in Brussels, Brussels, 9 March 2007.

¹⁸ ‘EU Agrees to Reform Services Plan’, BBC News, available at: http://news.bbc.co.uk/1/hi/world/europe/4374007.stm, accessed 5 October 2007.

¹⁹ Interview 4, Representative of the British Permanent Representation in Brussels, Brussels, 21 March 2007.

²⁰ Interview 5, Representative from Business Europe, Brussels, 9 March 2007.

²¹ Interview 6, Member of the European Parliament, Brussels, 11 April 2007.

²² Interview 2, Representative of the European Commission, Brussels, 9 April 2007.

²³ Interview 8, Administrator of the European Parliament, Brussels, 22 May 2007. This interviewee was in the working group.

²⁴ Interview 6, Member of the European Parliament, Brussels, 11 April 2007.

²⁵ Interview 7, Administrator of the European Parliament, Brussels, 11 April 2007.

²⁶ Interview 6, Member of the European Parliament, Brussels, 11 April 2007.

²⁷ ‘Q&A: Services Directive’, BBC News, 15 November 2006, available at: http://news.bbc.co.uk/1/hi/world/europe/4698524.stm, accessed 5 October 2009.

²⁸ These figures and their resultant breakdown were supplied by an analysis of the roll-call vote conducted by interview 7, Administrator of the European Parliament. For further information see: http://www.europarl.europa.eu/oeil/FicheUnique.do?documentReference = A60409/2005&procedureReference = COD/2004/0001&language = en, accessed 9 October 2009.

²⁹ This section concerns the EU negotiations over the financial system rescue package, also known as the bank bailouts. During the period of analysis, the EU also negotiated the European Economic Recovery Plan (EERP), the EU's agreed fiscal stimulus. Owing to the constraints of space, the EERP is not analysed.

³⁰ For a more in-depth analysis see Carmassi et al. (2009), Eichengreen et al. (2009) and Hodson and Quaglia (2009).

³¹ ‘Europe Looks for a Financial Crisis Plan’, Der Spiegel, 2 October 2008, available at: http://www.spiegel.de/international/business/bailout-divide-europe-looks-for-a-financial-crisis-plan-a-581918.html, accessed 18 October 2013.

³² Nervousness in the global financial system was a double-edged sword for the East. First, Raffeisen, Erste, UniCredit and Swedbank, which dominate the region, were all facing liquidity problems at home and became reluctant to transfer capital to their subsidiaries in the East in case it was required at home. Second, the drying up of the foreign investment in the region, which had plugged current account deficits by providing a steady flow of hard foreign currency, left many governments struggling to repay their international obligations. Credit ratings of state bonds were downgraded and country risk indicators deteriorated sharply. National currencies were shaken with devaluations of between 20% and 25% for the Polish Zloty, the Hungarian Forint, the Czech Koruna and the Romanian Lei. This created further problems because a significant proportion of mortgages and private sector loans are in foreign currencies (58% of Polish and 85% of Hungarian mortgages). The devaluations increased the costs of such liabilities and concerns were raised that the East would suffer from a debt shock, i.e. it would be unable to repay its foreign denominated loans (see Galgóczi 2009).

³³ The Managing Director of the IMF, Dominique Strauss-Kahn, said that he expected a ‘second wave of countries to come knocking’; see ‘Eastern European Currencies Crumble as Fears of Debt Crisis Grow’, The Telegraph, 17 February 2009.

³⁴ See such headlines as ‘Eastern Europe: Who's Next?’, The Economist, 23 October 2008, available at: http://www.economist.com/node/12465279, accessed 10 October 2013; and ‘Eastern Europe: Smouldering’, The Economist, 6 November 2008, available at: http://www.economist.com/node/12564042, accessed 10 October 2013; see also Kulish (2008) and Evans-Pritchard (2008).

³⁵ French Presidency of the European Union, ‘Summit on the International Financial Crisis’, 4 October 2008, available at: http://www.eu2008.fr/PFUE/lang/en/accueil/PFUE-10_2008/PFUE-04.10.2008/sommet_crise_financiere_internationale.html, accessed 28 November 2009.

³⁶ ‘Sarkozy Recoils from EU Wide €300Bn Bailout’, Financial Times, 3 October 2008, available at: http://www.ft.com/cms/s/0/25cada64-9089-11dd-8abb-0000779fd18c.html#axzz2iBkjUPBA, accessed 5 November 2013.

³⁷ Eurogroup refers to those states that use the euro (€) as their currency. This is sometimes also referred to as the Eurozone.

³⁸ CEE states (Slovenia and Slovakia) who were members of the Eurogroup of states were in attendance.

³⁹ ‘Germany and France Lead €1 Trillion European Bailout’, The Times, 13 October 2008, available at: http://www.thetimes.co.uk/tto/business/industries/banking/article2159047.ece, accessed 18 October 2013.

⁴⁰ ‘Nicolas Sarkozy veut diriger la zone euro jusqu'en 2010’, Le Monde, 22 October 2008. See also ‘Speech by M. Nicolas Sarkozy, President of the Republic, before the European Parliament, Strasbourg’, 21 October 2008, available at: http://www.ambafrance-uk.org/President-Sarkozy-s-speech-before, accessed 10 October 2013.

⁴¹ ‘Czechs Reject Sarkozy's Eurogroup Presidency Plans’, EurActiv.com, 24 October 2008, available at: http://www.euractiv.com/priorities/czechs-reject-sarkozy-eurogroup-presidency-plans/article-176640, accessed 10 October 2013.

⁴² ‘France Calls Extraordinary EU Summit on Crisis’, EurActiv.com, 27 October 2008, available at: http://www.euractiv.com/euro/france-calls-extraordinary-eu-summit-crisis/article-176680, accessed 18 October 2013.

⁴³ Interview 10, Representative of the Czech Permanent Representation in Brussels, Brussels, 15 December 2010.

⁴⁴ ‘President Barroso Invited to an Informal Meeting with Central and Eastern European Countries Ahead of the 1st March Council’, DG Communication, Press Conference, extracts from the EC midday press briefing, 20 February 2009, available at: http://ec.europa.eu/avservices/ebs/schedule.cfm?page = 1&date = 02/20/2009, accessed 18 October 2013.

⁴⁵ Interview 11, Representative of the Polish Permanent Representation in Brussels, Brussels, 14 December 2010.

⁴⁶ ‘European Council, Informal Meeting of the Heads of State or Government of 1 March 2009: Joint Press Lines’, available at: http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/misc/106390.pdf, accessed 19 October 2013.